The hydrogen aspiration
Hydrogen, hydrogen, hydrogen! The miracle fuel of the green energy transition. One of the planet’s most abundant elements that is blessed with high energy density. For hydrogen’s proponents (and there are many of them), not only can green hydrogen provide carbon free molecules to heat and feed industry, but it is also the missing link that enables low-cost ‘surplus’ renewable energy to be stored and transferred across time and place to power the green energy future. From water to energy to water – there couldn’t be a more perfect energy transition story.
The hydrogen momentum
As a layperson, you wouldn’t be alone if you felt that hydrogen was to the energy transition what location is to real estate. Clean green hydrogen has generated enormous attention over the past two years enjoying unprecedented political and business momentum, with the number of policies and projects around the world expanding rapidly (now nearly 400 hydrogen projects globally). Some twenty countries, collectively accounting for nearly half of global GDP, have already adopted hydrogen strategies, or intend to do so; and Australia is in the thick of it. Australia is endowed with the key ingredients for the green hydrogen economy with world leading renewable energy resources, strong export infrastructure, and proximity to high potential export target markets in Asia. In a rare outcome, development of a hydrogen industry in Australia has bipartisan support at the Federal level and there is strong alignment with all State and Territories hydrogen strategies.
Proponents are touting a green hydrogen economy as key to the energy transition. The catchcry is to scale up technologies and bring down costs to allow hydrogen to become widely used in powering our mobility, heating our living rooms, feeding our industry, and storing our precious wind and solar energy for when and where we most need it. However, for an industry that is subject to immense government subsidy in order to launch, identifying where and how to allocate this debt fuelled public funding is key to determining whether we are spending our kids inheritance wisely.
A return to hydrogen chemistry and thermodynamics
To help ‘get under the hood’ and understand better the potential role for hydrogen in a transitioning energy marketplace, I recently attended the Connecting Green Hydrogen conference in Melbourne. To help me make sense of discussion and debate around varying topics of the green hydrogen economy such as; electrolyser technology learning curves, giga and megawatt power, and ammonia and methocyclohexane (MCH) vectors for hydrogen transport, I was compelled to return to my high school chemistry and thermodynamics to try and understand hydrogen’s inherent potential.
In the first Part of this three-part series on hydrogen, I focus on hydrogen’s existing role as a molecular feedstock into the refining and chemical industries.
Hydrogen doesn’t exist on its own; it needs to be manufactured and currently by fossil fuels
While it is true that hydrogen is an abundant chemical element, it rarely exists on its own and therefore needs to be manufactured. As it happens, today more than 120mt of hydrogen is manufactured globally. It is mainly used in making ammonia fertiliser for food production, for chemicals such as methanol, and to remove impurities during oil refining. More than 98% of this ‘black’ (coal sourced) or ‘grey’ (natural gas sourced) hydrogen is currently manufactured through the conversion of fossil fuels in the Steam Methane Reforming (SMR) chemical process – which as it turns out is very carbon intensive. As an energy intensive chemical process, hydrogen created via SMR generates nearly 8-10x (or as much as 20-35x if sourced from coal) as much CO2 as the mass of hydrogen resulting from the process. To put these numbers in context, current CO2 emissions globally from SMR are around the same as the global aviation industry each year. Umm, so far from being a miracle fuel, in fact hydrogen seems to be quite a problem to solve in the world’s 2050 decarbonisation roadmap.
Blue and green manufacture of hydrogen provide more carbon friendly manufacturing alternatives
‘Blue’ hydrogen is hydrogen manufactured by converting fossil fuels in the Steam Methane Reforming (SMR) chemical process that is equipped with carbon capture and storage (CCS). While blue hydrogen seems to have its proponents through its ability to solve a large part of the direct carbon emissions from SMR, opponents bristle at the increased demand for gas (40% higher gas consumption in CCS versus without CCS), the further locking in of fossil fuels into the energy transition, and the very harmful CO2 impacts of fugitive methane in blue hydrogen’s supply chains.
What is green hydrogen? It has been around for so long, so why hasn’t it been adopted?
Enter ‘green’ hydrogen. Green hydrogen is generated by the breakdown of water into its hydrogen and oxygen elements through an electrolysis chemical process powered by renewable energy. Electrolyser technology is not new and has been around for nearly 250 years! However, on previous occasions, rising interest in green hydrogen fizzled out without lasting effect. The key question is whether fundamentals have changed sufficiently to finally allow green hydrogen to have its day?
Hydrogen manufacture is very energy intensive and hence expensive to make
So what’s the catch? The electrolysis process is very energy and capital intensive – a 10MW electrolyser (large by today’s standard) produces around 1ktpa hydrogen and needs somewhere between 2-4x (20-40MW) the renewable wind and solar generating capacity to power it. To put this in perspective, Australia currently has only 1.5MW installed electrolyser capacity with a target of 3x 10MW electrolysers by 2023. If Australia’s current hydrogen demand is around 3mt this would require 30GW of electrolysers (1000x the capacity targeted for 2023) and an additional 60-120GW of renewable energy to purely feed Australia’s existing hydrogen demand. This renewable energy investment is over and above the renewable capacity required to ‘green’ existing power supply and support the further electrification of energy use – with applications such as electric vehicles. These are immense numbers in capital equipment, wind farms, solar panels, batteries, and distribution infrastructure scattered across the countryside just to service Australia’s existing hydrogen demand.
Prioritising the green hydrogen economy on decarbonising its existing industrial carbon footprint
Not surprisingly, green hydrogen is some 2-4x the cost of its grey hydrogen cousin with no natural customer demand without immense government subsidies (>75-80% currently). Significant improvement is needed to remove the very large ‘green’ premium of green hydrogen. Given the size and scale of hydrogen’s existing market as an industrial feedstock, focusing green hydrogen’s development on decarbonising this market segment seems to be the least-regrets place to launch a green hydrogen economy. Importantly there needs to be a way to overcome the usual chicken-or-egg problem of demand waiting on supply waiting on demand; a cycle that will only be broken with significant government subsidies. The solution to de-risking this public investment is to anchor early hydrogen infrastructure around the least-regret hydrogen demand as a molecular feedstock into industry.
Prioritising green hydrogen around industrial demand has additional benefits in supporting a nascent green hydrogen industry. Industrial demand is generally clustered with a few customers in a small number of geographic locations (industrial hubs such as Gladstone and Newcastle). With coordination, this demand can underpin development of scale hydrogen supply and help drive electrolyser costs and associated infrastructure down the technology learning curve. Locating and matching scale hydrogen supply close to scale demand also helps reduce complexity (and cost) around storage and distribution with more of a just-in-time supply. In addition, industrial clusters are generally located close to ports where hydrogen infrastructure could primarily serve the initial needs of the domestic market while also sowing the infrastructure seeds for a hydrogen export market should it emerge.
Solving todays problem is a precursor to exploring broader application of the green hydrogen economy
While forecasters of the 2050 hydrogen economy predict a future hydrogen market size many multiples of today due to a broadening role of green hydrogen in the energy transition, it is hard to see how and why this will eventuate if green hydrogen can’t be developed as a credible alternative to decarbonising its existing industrial carbon footprint.
Stay tuned for the next instalment of this green hydrogen series where I unpack further thermodynamics of hydrogen which have an important influence on aspirations for broadening the green hydrogen economy.